outotec sustainability report 2017 · 4 outotec / sustainability report 2017 plant is a model that...

Outotec Sustainability Report 2017Refining data for sustainability

2 OUTOTEC / SUSTAINABILITY REPORT 2017

ContentsYEAR 20173 CEO’s message 5 This is Outotec6 Our strategy7 Sustainability highlights in 20178 Value creation and our impacts

OUR AGENDA11 Risks and opportunities due to climate change14 Most significant topics16 Sustainability Agenda 2020 18 Annual targets20 Refining data for sustainability21 Engaging with stakeholders

OUR PERFORMANCE25 Safety – our number one priority26 Sustainable offering 28 Responsible business practices31 Building a sustainable supplier base33 Driving employee engagementCases35 Future smelting is digital35 Reduction of SO2 emissions verified by satellite data36 Improved fault detection through a virtual plant36 Hacking for sustainability

DATA 37 Data collection38 Environmental data 43 Social data

GRI 48 About this report49 GRI, Global Compact, and SDG content index

ASSURANCE56 Independent Assurance Report - Outotec Sustainability Report 2017

CONTACTS 58 Contacts


Confident and excited about the future

YEAR 2017 | CEO’S MESSAGE

Our customers clearly have a more positive market outlook than a year ago. Recovery started in the second half of 2016 and contin-ued throughout 2017. As demand for metals grows, new greenfield investments will start taking place, in addition to brownfield projects on existing sites. For example, the electric car market and renewable energy generation and storage increase the demand for lithium, nickel and cobalt as well as copper. The need for aluminum grows and the zinc market is active. Stainless steel use supports the pro-duction of ferrochrome.

CUSTOMERS SEEK RESOURCE EFFICIENCY I met dozens of our customers during the year. The availability and cost of energy, water as a critical resource and digitalization are crucial for them. Elimination of harmful substances and cutting emissions are also high on the agenda. Customers strive to ex-tract all valuable minerals from mined ores. The same applies to materials already ex-tracted. This is sustainability in action: getting the best possible result with the smallest en-vironmental impact.

The feedback Outotec receives is con-sistent; customers highly appreciate Outo-tec’s leading technologies and expertise in minerals and metals processing. The more demanding the mineral, the more likely that we are involved, lithium being one example of many. Where we need to improve is in cus-tomer dialogue, in which a more proactive ap-proach is sought. It is up to us to take initia-tive in going through processes together and suggesting improvements for customers.

NEW STRATEGY SHOWS DIRECTION FOR 2018–2020 Outotec aims to provide customers with leading technologies, superior customer service and excellent execution. Our new strategy builds on our mission, ‘Sustaina-ble use of Earth’s natural resources’. Our business focuses on the entire value chain, from ore to metals, throughout the custom-ers’ plant life cycle. The equipment and plant

business is strongly complemented by an in-creasing share of services, which brings sta-bility to our business.

We have ambitious profitability and growth targets for delivering value to investors, who have shown patience during the recent diffi-cult years. Global megatrends provide busi-ness opportunities, as Outotec has solutions for improving process efficiency and helps customers to choose the best, sustainable

technology. We provide solutions that sup-port water management as well as circu-lar economy.

REFINING DATA FUELS DIGITALIZATIONAs digitalization advances, the significance of collecting and analyzing data becomes more and more evident. Virtual models are increas-ingly developed and applied to process optimi-zation and fault detection. The Outotec virtual


plant is a model that can be used to simulate the behavior of a real plant. The main goals of simulation-based digital products are in-creased productivity and availability, reduced energy consumption and sufficient product quality.

Digitalization of smelting processes im-proves recovery while enhancing sustainabil-ity and safety. When high risk manual tasks are eliminated in a smelter and decisions are based on reliable data, process stability im-proves and emissions decrease.

In November, the Junction 2017, Europe’s biggest hackathon took place in Espoo, Fin-land. It gave young developers, designers and entrepreneurs a chance to show their innova-tion skills. Outotec was one of the partners of the event, with two challenges: a sustainabili-ty challenge and a service challenge.

The benefits of digitalization are highlight-ed in the case stories of this report.

GREAT LEAP TAKEN IN EMPLOYEE ENGAGEMENTWe want to offer our own employees an in-spiring work environment. Our 2017 employ-ee survey showed 18 %-points improvement of the engagement index from 2016 and we are well on track towards our long-term tar-gets. Based on the results, senior leadership has succeeded in communicating a motivat-ing future vision. People are proud to work for the company and they feel that their job is challenging and interesting. The link between one’s own work and Outotec’s objectives is clearer, as are roles and responsibilities.

Good results have been reached through collaboration. People provided extremely val-uable input for the whole strategy process.

We paid special attention on clarity of roles and on communicating our strategy to all em-ployees in cross-functional workshops. We completed a global leadership program for 100 leaders in 2017. In addition, local leader-ship programs were developed in each mar-ket area. Sales leadership, value selling and services trainings were also developed to enhance our competences in the customer interface.

On the other hand, we have not yet reached our diversity goals. Those goals in-clude, for example, increasing the share of women in management positions. In safety, we have an ambitious ultimate target of zero accidents. The key indicator, lost time injury rate, improved slightly in 2017.

UN’S GOALS INTEGRATED INTO OUR SUSTAINABILITY AGENDAWe have defined our most significant im-pacts with regard to the UN Sustainable Development Goals and integrated the SDGs into our Sustainability Agenda. The five most important SDGs to Outotec’s operations and sustainability work are: Good health and well-being; Climate action; Decent work and economic growth; Responsible consumption and production; Quality education.

Outotec is committed to supporting and implementing the principles of the UN Glob-al Compact concerning human rights, work-ing life, environmental affairs, and anti-cor-ruption. Likewise, we respect The Universal Declaration of Human Rights. In 2017 Outotec carried out a human rights assessment. We did not find any significant risks or negative impacts of our business.

INSPIRING AND FRUITFUL COLLABORATIONOutotec achieved the EcoVadis Gold certifica-tion for its corporate responsibility practices in August 2017. The company ranked in the top 5% suppliers in its field. The Gold certifi-cation indicates a strong commitment to re-sponsible sourcing practices. At the beginning of 2018, Outotec was ranked 5th in the Global 100 Index of the most sustainable companies in the world. Being included in the Index for six consecutive years is a great recognition to our work.

These acknowledgements and the feedback from our personnel, investors, customers and partners tell us that we are moving in the right direction. Thank you so much for the inspiring and fruitful collaboration. Together, we continue developing resource-efficient solutions for the sustainable use of natural resources.

Markku TeräsvasaraPresident and CEO

YEAR 2017 | CEO’S MESSAGE


This is OutotecIn line with our mission targeting the sustainable use of Earth’s natural resources, we develop and deliver resource-efficient technology and service solutions for processing minerals and metals, for water treatment, and for producing energy from biomass and wastes.

Outotec’s unique position at the forefront of the mineral processing and metallurgical industry is founded on a century of scientific knowledge and operational experience, which have result-ed in a wide range of applications, particular-ly for processing virtually all types of ores and minerals. The innovative research done at our in-house R&D centers and our continuous development work realized together with our customers have made us the leading developer of technology in our field.

Outotec’s product portfolio includes hun-dreds of various plant concepts, processes, and pieces of equipment that are marketed under the Outotec brand. In addition, Outotec has a variety of service products related to the maintenance and upgrade of the equipment and plants delivered by Outotec. None of Ou-totec products or services are banned in any markets.

Our customers are large global mining companies, small and medium-sized mining, metallurgical and energy companies in de-veloped countries as well as local mining and metallurgical companies in emerging regions. Customers are investing either in new pro-cessing plants or modernizing their existing plants to increase the profitability of their op-

Key figures 2017 2016 2015

Sales, EUR million 1,139 1,058 1,201

Adjusted operating profit*, EUR million 32 -23 56

R&D expenses, EUR million 56 55 61

Priority applications 38 57 93

Number of employees 4,146 4,192 4,859

Employee engagement index, % 60 42 56

Wages and salaries, EUR million 326 329 353

Lost time injury rate (LTIR) per 1 million working hours 1.7 1.8 2.8

Share of environmental goods and services in order intake, % 88 90 90

GHG emissions avoided by using Outotec technologies, thousand tonnes of CO2e 6,218 5,870 5,469

Total GHG emissions, tonnes of CO2e per EUR 1 million sales 24 27** 30**

Total energy consumption, TJ 160 166 165

*) excluding restructuring and acquisition-related costs and purchase prize allocation amortizations**) restated figure

erations, improve their resource efficiency, or reduce their emissions, energy consumption or fresh water use. We can deliver an entire process or plant, or a single piece of equip-ment, with related engineering, sourcing, commissioning, training and life-cycle ser-vices. New mining or industrial plant invest-ments involving also Outotec’s technologies may be subject to stakeholder questions and public debate in the target countries. These questions are mainly targeted to Outotec’s customers.

We sell products and services to over 80 countries through our market area network. Europe, Middle East and North Africa (EMEA) is our largest market area in terms of sales and personnel.

Outotec, headquartered in Espoo, Finland, operates globally with offices in 36 countries. Major operations based on the number of employees are located in Finland, Germany, Australia, South Africa, Chile, Sweden and Brazil. Local customer centers provide full support for our customers’ businesses – both in the everyday running of their operations and when they make new investments. In addition, we use sales agents in countries where we do not have established presence. Our two reporting segments – Minerals Processing; and Metals, Energy & Water – are dedicated to the creation of sustainable technology solutions and life-cycle services for our customers. As of April 2017, a new Services organization was established to focus on developing our service offering and competences as well as delivering services for our customers.

Outotec has been listed on the NASDAQ Helsinki since 2006, and the company was

5th most sustainable company on the Global 100 list

rated in the Mid Cap category in 2017. The company’s market capitalization at the end of 2017 was EUR 1,300 million. Outotec’s total capitalization was EUR 470 million, of which EUR 320 million was funded by equity and EUR 150 million by a hybrid bond. The parent company Outotec Oyj has 100% ownership of

SALES EUR 1,139 MILLION, BY REGION

EMEA 49%Americas 34% APAC 17%

PERSONNEL 4,146, BY REGION

EMEA 68%Americas 18% APAC 14%

its subsidiaries. There were no major changes in Outotec’s company structure, the owner-ship, or supply chain during 2017.

Read about Outotec’s financial perfor-mance, legal entities and shareholders in our Financial Statements 2017 at www.outotec.com/investors.

YEAR 2017


Our strategy Outotec’s strategy is to serve customers with leading technologies, superior customer service and excellent execution.

In line with our mission - targeting the sus-tainable use of Earth’s natural resources - Outotec is committed to protecting the envi-ronment in all its activities. We strive to serve our customers using our wide range of lead-ing minerals and metals processing technol-ogies and life-cycle services. By 2020, we also aim to achieve superior customer service and excellent execution.

Our commitment to sustainability binds us to take a holistic view of our customers’ busi-ness. As countries start implementing the Paris climate agreement, we expect carbon emission controls to start playing an increas-ing role in addition to existing stringent re-strictions on emissions of harmful substanc-es to air or water.

Megatrends such as urbanization, resource efficiency and sustainability, coupled with dig-italization bring opportunities for Outotec. While safety has long been a top priority for our industry, environmental performance and social license to operate are also increasing-ly at the forefront of our customers’ minds, not least because of tightening regulation. We also see many unused business opportunities and some threats in China, the country producing over half of the world’s metals and owning an increasing share of the world’s mining assets. Volatility and the cyclical nature of our busi-ness is expected to continue, which drives us to further grow our service business.

The key in our climate change strategy, made in 2016, is harnessing our technology for the transition to a low-carbon industry. We have complemented the estimated impacts of megatrends with the opportunities and risks defined in connection with our climate change strategy work.

Our short-term priority is to improve our profitability to achieve economic sustainability. We also work to grow our service business to enhance our ability to create value over the cycles.

TO BE ABLE TO REACH OUR 2020 VISION, WE ARE WORKING ON FIVE DEVELOPMENT AREAS:

1) Customer focus To deliver the best customer experience

we will develop our account management, sales and leadership competences and improve responsiveness.

2) Service business Services bring us a steady revenue flow,

long-term customer relationships and sustained margins. We will increase local presence and focus on our existing customer relationships and installed base to maximize customers’ return on investment. We aim to increase productivity by digitalization. Our Services organization, established in April 2017, is dedicated to developing our service offering and creating the growth.

3) Product competitiveness We work to improve the cost competi-

tiveness of our products by further dif-ferentiation through digitalization and improvements in energy and environ-mental performance. By redesigning products, by changing components with-out compromising on quality, and by searching for lower cost supply alterna-tives we aim to reduce sourcing costs.

4) Project excellence We work to improve the quality of our pro-

ject deliveries and bring flexibility to the cost base.

5) Our people Since we are an expertise-based compa-

ny, people are our most valuable asset. In recent years, we have unfortunately seen a dip in employee engagement. We are working to create an environment for our people to develop, succeed and find joy in their work. Leadership development is one focus area in this work.

Read also: • Long-term financial targets, p. 16.

YEAR 2017


Sustainability highlights in 2017

Outotec retained its position in the Global 100 list of most sustainable companies

Jan 18

Outotec receives the Silver Class distinction for its excellent sustainability performance and is included in 2017 in the Sustainability Yearbook by RobecoSAM

Jan 20

The Ethiopian State Minister with her delegation visited Outotec to discuss renewable energy solutions

Jan 26

Outotec and the Committee of Industry, Energy and Subsoil use of the Kyrgyz Republic agree on the cooperation of sustainable use of natural resources of the Kyrgyz Republic

Jan 30

Q2Q3

Q1

Q4

Resource efficiency to the forefront - Outotec’s sustainability report 2016 published

Mar 29

Outotec appoints Gustav Kildén Senior Vice President, Strategic Customers and Business Development at Outotec

Aug 3

Outotec achieves EcoVadis Gold certification for its corporate responsibility practices and ranks in the top 5% of suppliers in its field

Aug 9

Outotec appoints Tomas Hakala President of Services business

Aug 14

Outotec updates its long-term financial targets

Sep 18

This is Outotec 2020 – new strategy launched

Sep 21

Outotec’s Capital Markets Day held in Outotec House

Sep 21

O’People employee engagement survey run

Nov 1

31st anniversary meeting of the Chinese-Finnish Joint Working Group for Non-Ferrous Metals Industry was held in Shenzhen, China

Nov 21

Outotec participated in Junction 2017, Europe’s biggest hackathon

Nov 24

Our safety performance was improved – the measured lost-time injury rate was 1.7 (2016: 1.8)

Dec 31

New Services organization started its operations

Apr 1

YEAR 2017


Value creation and our impacts The key resources for Outotec’s value creation are deep know-how of processing natural resources, technology patents, research and development, as well as Outotec brand. In addition, long customer and supplier relationships are essential resources for the company.

FINANCIAL IMPACT Outotec’s approach to economic sustainabili-ty is demonstrated by our long-term financial targets involving profitability and continuous growth. We strive for transparency in our op-erations, and we base our decisions on sound business reasons and commercial rationale. Our approach is also reflected in four of our material themes:

• Sustainable offering • Responsible business practices• Sustainable supply chain• Engaging with stakeholders

DIRECT ECONOMIC VALUE GENERATED AND DISTRIBUTED (GRI 201-1) The market environment improved in 2017, and the year was clearly more positive for Ou-totec than 2016. Our order intake increased by 20% from 2016 and we saw an accelerated growth towards the end of the year. In terms of sales and profitability, our two business segments were in different phases. The sales of the Minerals Processing segment and ser-vices developed favorably throughout the year, whereas the sales of the Metals, Energy & Water segment decreased. Group sales in-

creased by 8% and service sales by 6% from 2016. The sales growth and our fixed cost sav-ings improved our profitability. However, the result of Metals, Energy & Water remained negative. Therefore, we initiated new meas-ures – such as the outsourcing of some engi-neering activities – to enhance flexibility and ensure the future profitability of the segment.

At the end of 2017, Outotec’s market cap-italization was EUR 1,300 million (2016: EUR 914 million). The total wealth created by Ou-totec in 2017 was EUR 347 million (EUR 344 million).

As Outotec’s key asset is employees, the most significant economic value distributed is wages and salaries, which amounted to EUR 326 million in 2017 (EUR 329 million).

Long customer relationships and 3,000 di-rect suppliers are also essential resources for

Region

Wages and salaries, EUR

millionNumber of employees

EMEA 199 2,813

Americas 59 758

APAC 68 575

Outotec, since some 90% of our manufactur-ing (based on monetary value) is sourced from external suppliers.

Due to negative result in 2016, Outotec did neither pay dividends to shareholders nor contributions to charities in 2017. In future, Outotec aims to maintain its leadership in sustainable technologies and grow its service business to enhance its ability to create value over the cycles.

YEAR 2017

Read also:• Risks and opportunities due to climate

change, p. 11 • Outotec Financial Statements 2017

INDIRECT ECONOMIC IMPACTS (GRI 203-2)Large mines and processing plant investments – built with Outotec technology – considera-bly boost the development of the host country and its economy. They may create hundreds or thousands of new jobs, while also leading to the establishment of new industrial plants and growth of businesses along the value chain from natural resource extraction to fin-ished products. In such greenfield plant de-liveries by Outotec, the indirect economic im-pacts are considered significant. Outotec has been active in developing the resource based industries in many developing countries, such as Mongolia, Kazakhstan, and Zambia, to mention a few.

As the majority of Outotec’s manufacturing is sourced from external suppliers, we play an important role in supporting local businesses. This generates employment and wealth in local communities. In large projects, as many as sev-eral hundred local engineers and other special-ists, contractors and service providers work for us. A single large project can consist of over 10 million working hours at customer’s site. Most of this work is done by local suppliers or sub-contractors.

In 2017, Outotec’s largest projects under implementation in terms of number of contrac-tors were in the United Arab Emirates, Brazil, Peru and Bahrain. In terms of money, the larg-est shares – each amounting to EUR 10–50 mil-lion – were spent in Australia, Brazil, Canada, Chile, China, Mexico, the USA and South Africa.

The remaining spend was distributed among 38 countries.

Where Outotec has long-term service con-tracts with customers, maintenance and ser-vice personnel are normally hired locally and we train them for their specific tasks after the plant has been built.

Often Outotec technologies help to im-prove the environmental conditions of the communities surrounding customers’ plants, which improves the living conditions of peo-ple, contributes to a healthier population and boosts agriculture and small businesses. One example of measuring the environmental im-pacts is described in our case about the re-duction of sulfur dioxide emissions verified by satellite data, p. 35.

We have also calculated the financial impact of the annual emissions avoided by Outotec’s customers, in total 6.2 million tonnes CO2e, us-ing seven Outotec technologies. The CO2 Euro-pean Emission Allowances Commodity Price [www.markets.businessinsider.com/commod-ities/historical-prices/CO2-emissionsrechte/EURO/1.1.2017_31.12.2017] (Dec 31, 2017) was EUR 5.76/tonne CO2. By using this price, the val-ue of the emissions avoided was approximately EUR 36 million. Using similar calculating meth-od, the financial impact of our own emissions was EUR 159,000, and that of our supply chain EUR 2.9 million.

R&D activities generate jobs and enhance skillsOutotec also contributes to local communi-ties through university cooperation and sub-contracting R&D work, which generates local jobs and enhances skills and knowledge de-velopment. Ongoing research and develop-

http://www.outotec.com/investors


VALUE CREATION AND IMPACTS OF OUR BUSINESS

ECONOMIC VALUE GENERATED

Business activities

• R&D, raw material testing, product management, EUR 56 million

• Sales EUR 1,139 million• Marketing• Engineering• Sourcing EUR 462 million • Manufacturing• Delivery• Installation and commissioning• Life-cycle support for customers

0 retained in the company

Intellectual• Outotec brand and reputation

• IPRs, 763 patent families

• Tacit knowledge

• 2 R&D centers, 1 Dewatering technology center

Operational• Operations in 36 countries

• 2 manufacturing units, 8 assembly or service workshops, 1 ceramic plate production unit, several warehouses

Natural• ISO 14001 global certification for environmental

management

• Materials used Steel 3,624 t; Wood packaging 186 t

• Energy consumption: 160 TJ

• Water withdrawal: 54,100 m³

Human• 4,146 employees

• Outotec culture

• 2,410 contractors

Social• Long customer relationships

• 3,000 suppliers

• Relationships with the academic community

Financial• Capitalization EUR 470 million, of which

- EUR 320 million funded by equity and

- EUR 150 million by a hybrid bond

Customers• Sustainable products and services

• Long-term support and partnership

• Social license to operate

Planet Earth• Emissions avoided 6.2 million tonnes of CO2e,

valued at EUR 36 million

• Increased resource efficiency

Suppliers• Long-term partnerships

• Economic sustainability, EUR 462 million spent on suppliers

• Responsible business practices

Academic community• Subcontracted R&D work EUR 8 million

• Thesis opportunities and internships for students

Investors and financiers• Market capitalization EUR 1,300 million

• Compliance and transparency

• Net finance expenses EUR 7 million

• Interest on hybrid bond EUR 11 million

• Dividends 0

STRATEGY AND

RESOUR

CE ALLOCATION

RISK

S AN

D O

PPOR

TUN

ITIE

S

VALUES AN

D CODE OF CONDUCT

Local communities• Employment and wealth

• EUR 287 million spent on local businesses

• Current income taxes EUR 5 million

• Community investments 0

GOVERNANCE

Employees• Wages and salaries EUR 326 million

• Wealth and professional growth

• Safe workplace, LTIR 1.7

• Respecting human rights

Sales EUR 1,139 million ./. Operating costs EUR 792 million = Value generated EUR 347 million


ment activities run together with our external partners received EUR 2.5 million in public funding. We additionally subcontracted work packages out to universities and mainly small and medium sized enterprises for more than twice this sum, over EUR 7.7 million. We also cooperate with local universities to enhance the skills and knowledge of students and de-cision-makers and train future plant opera-tors and service personnel.

Non-discriminatory tax policy As a globally operating company, Outotec en-gages in a variety of tax laws, regulations, practices and interpretations. The internation-al tax environment is challenging to navigate, however we are committed to being a respon-sible, compliant tax payer in each country where we operate. We pursue transparency and fairness in our tax practices, and do not engage in aggressive tax planning. Our tax management has a proactive approach.

In 2017, Outotec paid a total of EUR 2.5 million (2016: 6.4 million) in corporate income taxes. The following table lists the corporate income tax rates for Outotec in the countries where we were subject to corporate income taxation in 2017. In Finland, Outotec paid EUR 1.6 million (EUR 2.3 million) in income taxes, and in other countries EUR 0.9 million (EUR 4.1 million). Outotec’s effective tax rate was 87% (11%). The US tax reform had a one-time negative effect of EUR 6 million to the tax rate in 2017. Without this one-time item, our effec-tive tax rate would have been 45%.

Also, Outotec pays, collects and remits other taxes and tax-like payments, such as value added and sales taxes, payroll taxes and capital taxes. Our total tax contribution varies depending on the geographical distribution of sales, which in turn is affected by our product mix and locations of customer projects. We have transparent communication with the tax

Corporate income tax rates by country in 2017

RELATED POLICIES:• Outotec Corporate Governance Policy• Code of Conduct• Outotec Risk Management Policies• Supplier Policy • Supply Policy• Tax Policy

authorities in every country where we operate. Outotec engages in large projects, howev-

er there may be only one project ongoing in a country. Due to the confidential nature of the information and the varying quantities of pro-jects worldwide we cannot disclose country specific financial information. Also, the des-tinations of our sales typically do not corre-spond with the places in which the work and sales activities are performed, value creat-ed, and where the income must be reported and taxes paid. Providing country-specific tax information would not give a comprehensive picture of the fairness of the tax distribution in Outotec’s case.

YEAR 2017

Country Corporate income tax, %

Australia 30

Austria 25

Bahrain 0

Brazil 34

Bulgaria 10

Canada 25.8

Chile 25.5

China 25

Finland 20

Germany 29.2

Ghana 25

Greece 29

India 30.9

Indonesia 25

Iran 25

Kazakhstan 20

Mexico 30

Mongolia 10–25

Morocco 10–31

Mozambique 32

Country Corporate income tax, %

Namibia 32

Netherlands 20–25

New Caledonia 30

Norway 24

Peru 29.5

Philippines 30

Poland 19

Qatar 10

Russia 20

Saudi Arabia 20

Serbia 15

South Africa 28

Spain 25

Sri Lanka 28

Sweden 22

Turkey 20

United Arab Emirates 0

United Kingdom 19

United States 38

Zambia 35

http://www.outotec.com/company/about-outotec/code-of-conduct/http://www.outotec.com/company/about-outotec/suppliers/


Risks and opportunities due to climate changeThree billion new middle-class consumers will need vital resources such as metals and water in the coming decades. This makes it essential to optimize resource usage. Greater production capacity and more resource-efficient, sustainable technologies will be needed to fulfill the needs and on the other hand to tackle climate change related challenges. We feel that technology can change everything.

Our management annually evaluates the glob-al megatrends that impact Outotec’s business, examining related risks and opportunities to create the basis for strategic planning. Sus-tainability-related risks and opportunities are addressed in Outotec’s routine risk manage-ment processes. The megatrends identified in our 2017 strategy review as impacting Ou-totec’s business most are: Urbanization, Re-source efficiency, Sustainability, Digitalization, and Volatility. Overall, these global megatrends appear to bring Outotec more opportunities than threats.

The key in our climate change strategy, made in 2016, is harnessing our technology for the transition to a low-carbon industry. We have complemented the estimated impacts of megatrends with the opportunities and risks defined in connection with our climate change strategy work. In 2017, we also studied the adoption of Science Based Targets to reduce

our carbon footprint and enlargen our positive impact, our handprint, to enable our custom-ers reduce their carbon footprint. Policies re-lating especially to greenhouse gas emissions in different parts of the world are still evolving and we are following these changes, interact-ing with policy-makers as well as acting upon them in business development.

FINANCIAL IMPLICATIONS AND OTHER RISKS AND OPPORTUNITIES DUE TO CLIMATE CHANGE (GRI 201-2) To mitigate the risks posed by climate change, Outotec spent EUR 56 million in R&D and product development to improve the resource efficiency and competitiveness of its products. Our vast knowledge of mineralogy and our comprehensive R&D facilities enable Outotec to develop process solutions for low-grade and complex ores. In 2017, some 79% (2016: 66%) of our R&D projects were related to initiatives targeting improved metals recovery, energy saving, waste minimization, emission reduc-tion and/or safety improvement.

In line with our strategy, we develop new business concepts, modular products, and are increasing the use of target country suppliers and best-cost-country sourcing to increase our cost-competitiveness. We are also continu-ously investing in ICT systems and applications to utilize the opportunities of digitalization. In 2017, our investments amounted to EUR 21 million, consisting mainly of IT programs and intellectual property rights. Our plan is also to strongly develop our service business and expanding our waste-to-energy and water

management businesses to balance the cycli-cality of the mining industry. Our service sales in 2017 was EUR 475 million and our target is to grow it annually by over 10%.

Read also:• Value creation and our impacts, p. 9• Our offering, p. 26• Environmental data, p. 38

OUR AGENDA


OUR AGENDA

MEGATREND RISKS FOR OUTOTEC OPPORTUNITIES FOR OUTOTEC

URBANIZATION Growing demand for minerals and metals to satisfy the needs of the new middle class requires greater processing capacity and more resource efficient methods.

Our cost structure may be too high for some emerging coun-tries. If we fail to keep our portfolio competitive, we may lose market share.

Consumers’ changing behavior to replace metals with bio-based materials and plastics.

Our technologies enable efficient ore processing and higher yields, thanks to advanced process control.

As the concept of circular economy gains ground, we can sell more solutions for the production of metals from end-of-life secondary materials, such as electronic waste, metallic scrap, battery paste or scrap and mining and metallurgy related wastes still containing valuable materials.

Requirements for the efficient use of biomass and waste pro-vide opportunities for our waste-to-energy solutions.

RESOURCE EFFICIENCY Valuable metals and minerals must be more effectively re-covered, and tailings and waste must be better recycled and processed to enhance the efficient use of resources.

Ore grades are declining and ores are becoming more com-plex and more difficult to process. If we fail to develop new technologies or keep our portfolio competitive, we may lose market share.

Energy shortages and Climate Change mitigation related in-creased energy costs can reduce our customers’ competitive-ness and risk their ability to operate.

Availability of water varies, often there is scarcity and some-times floods.

Our customers will need to replace inefficient processes with new energy- and water-efficient solutions. Our technologies are energy efficient, recycle process water, decrease water loss, and lead to significant reductions in fresh water con-sumption.

Carbon taxes favor our energy efficient technologies.

Demand for closed water cycles provides business opportuni-ties for our water know-how.

Our technologies are benchmarks for many production effi-ciency standards and fulfill even stricter future standards.

SUSTAINABILITY To maintain their social license to operate, our customers are paying more attention to environmental, health, safety and social responsibility with regard to their employees and local communities.

Possible failure of Paris agreement, and lack of global regu-lation. Tighter regulation can cause customers to lose their competitiveness and cease to operate, carbon leakage.

The metals industry emits SO2, which has significant envi-ronmental impacts. Fine particulate matter emissions to air, and heavy metals in hazardous dusts and fumes cause health problems. Eco-toxic substances from metallurgical operations can impact air quality, water, and soils. If customers do not gain social acceptance, they may be forced to close down their operations.

Customers’ sites are often in remote locations with vulnerable habitats, flora and fauna infrastructures and biodiversity.

Outotec’s inclusion in the Global 100 Index of most sustainable companies confirm our image as a leader in sustainable solu-tions, which helps customers to gain social acceptance and fi-nancing for their projects.

International climate agreements and future air pollution lim-its direct towards the use of clean technologies: compared to peers, our solutions emit less and go below the most stringent environmental regulations.

In emission trading, reductions can generate positive cash flow for our customers which they can use for new investments or services.

Our tailings and water management solutions enable mining companies to solve their environmental challenges. We also of-fer waste-to-energy solutions that significantly reduce landfill while producing clean energy.


OUR AGENDA

MEGATREND RISKS FOR OUTOTEC OPPORTUNITIES FOR OUTOTEC

DIGITALIZATION The world is increasingly driven by connectivity, data, and software. Cloud computing, combining big data sets, ad-vanced analytics methods, new ways of interactions with machines, user experience requirements drawn from con-sumer applications and autonomous systems will become more commonplace in our business.

Digitalization is seen to play a major role in mitigating cli-mate change. If more agile players are entering the market, especially in high-value digital solutions, we may lose market share in our traditional areas.

Digitalization and the integration of customers’ processes of-fer new possibilities to create value using our unique process technologies. New cost-efficient and interactive partnership models with customers will become possible, supporting per-formance-based earnings.

Closer engagement with our customers, and the provision of timely data over entire product life-cycles can open up oppor-tunities for innovating new products, systems and services.

Advanced ICT systems offer business benefits and cost effi-ciency for Outotec. Through our worldwide network of experts, advanced master data management and ICT infrastructure, we ensure data quality and consistency across all business applications.

VOLATILITY Volatile investment activity rates, the speed of global GDP growth, metal consumption rates, and the balance or im-balance between supply and demand, capacity utilization rates and metal prices all greatly influence our business.

Customers’ operations require sufficient amounts of water, fossil fuels, power and mineral resources. Any changes relat-ed to the availability or the price of these commodities can in-crease customers’ operating costs, which may lead to the clo-sure of some operations, or postpone or cancel investments.

During downtrends, customers tend to minimize their invest-ments in new processing capacity. The lack of large custom-er projects can significantly reduce our sales and thereby our yearly or quarterly financial results.

A volatile macroeconomy also hampers resource planning due to unpredictability.

81% of our business comes from the cyclical mining and met-als industry. Business opportunities will increase substantially in an uptrend.

Changes in the global economy may boost our businesses in some parts of the world, and increase the demand for certain technologies or services including upgrades and modernization.

We operate globally, and offer solutions for virtually all types of minerals and metals, which reduces our dependence on any single commodity or geographical market. Our long-term ser-vice contracts, as well as modernizations prolonging the life-time of older equipment, counteract the highly cyclical mining and metals industry.


Most significant topicsBased on stakeholder dialogue, and considering the economic, environmental, and social impacts of our operations, we have defined nine sustainability topics that we see as important for Outotec in relation to risk management or value creation. Five of these nine topics are defined as most significant for Outotec and stakeholders.

Outotec conducted a wide-ranging review of material sustainability topics in 2014. Poten-tial topics were first identified together with an external partner, based on a previous ma-teriality assessment run in 2011, as well as management interviews, a review of sus-tainability trends impacting the industry, and stakeholder feedback. We next mapped all of the relevant economic, environmental and so-cial impacts that can influence stakeholders’ perceptions of Outotec.

Our Sustainability Working Group pri-oritized the identified significant topics in a workshop, which were then validated by the Leaders’ Forum, where about 100 of Outotec’s leaders shared their views on the topics. The results of the materiality assessment were also reviewed and verified by Outotec’s Sus-tainability Advisory Council, representing our key stakeholders. Finally, the Executive Board validated the results of the materiality as-sessment in 2015.

In 2017, the core team of our Sustainabil-ity Working Group reviewed the material top-ics against GRI Standards. The list of material topics was complemented by impacts and Ou-

totec’s involvement with the impacts to com-ply with the GRI Standards reporting frame-work. Outotec’s Executive Board validated the changes (GRI 102-46).

Based on the materiality assessment, the topics that matter most for Outotec are: 1 Safety2 Sustainable offering for customers3 Responsible business practices4 Sustainable supply chain5 Development of our people6 Equal opportunities and diversity7 Stakeholder dialogue8 Community involvement9 Minimizing our own environmental impact

The first five of these nine most material top-ics were chosen as the most significant is-sues for Outotec’s business and are reviewed in more detail in this report (GRI 102-47).

The most material non-financial topics for Outotec are also discussed in the Non-finan-cial report published in the Financial State-ments 2017 (www.outotec.com/investors)

Read also: • About this report, p. 48

OUR AGENDA

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5 Development of our people

• Outotec’s employees• Outotec’s operations at project sites• Contractors working under Outotec’s direct supervision

• Employee motivation and competences• Talent retention• Customer satisfaction• Safety performance• Financial performance

• Outotec causes or contributes to the impacts

6 Equal opportunities and diversity

• Outotec’s employees • Company culture• Employee relations• Gender equality• Reputation

• Outotec causes the impacts

7 Stakeholder dialogue • Outotec’s key stakeholders • Commitment to the company• Stakeholder involvement• Reputation• Shareholder value

• Outotec is directly or indirectly linked to the impacts

8 Community involvement • Outotec’s employees• Outotec’s largest manufacturing units, R&D centers and project sites• Local communities

• Wealth• Support for science, research and education• Social acceptance• Reputation

• Outotec causes the impacts or is directly or indirectly linked to the impacts

9 Minimizing our own environmental impact

• Outotec’s employees and premises • Climate change• Biodiversity

• Outotec causes the impacts

OUR AGENDA

Outotec’s material topic Boundaries Current or potential key impacts Outotec’s involvement with the impacts

1 Safety • Outotec’s employees • Outotec’s premises and project sites• Contractors working under Outotec’s direct supervision

• Occupational health, safety and security• Working environment• Injuries and lost working time• Occupational diseases• Customer satisfaction

• Outotec may cause or contribute to the impacts, or is directly inked to them (e.g. unsafe act or condition)

2 Sustainable offering for customers

• Outotec’s employees • Customers’ employees and operations• Outotec’s suppliers• Contractors working under Outotec’s direct supervision• Customers’ surrounding environment • Climate change

• Occupational safety• Product safety• Operation of customers’ plants• Resource efficiency• Social acceptance• Customer satisfaction• Climate change• Biodiversity• Financial performance

• Outotec causes the impacts, contributes to the impacts, or is linked to the impacts through its suppliers or customers using the products and services

3 Responsible business practices

• Outotec’s employees • Suppliers and contractors• Outotec’s sales representatives and agents

• Relationships with business partners• Legal compliance• Reputation and stakeholder value• Financial performance

• Outotec causes the impacts or is directly or indirectly linked to the impacts

4 Sustainable supply chain • Suppliers• Contractors working under Outotec’s direct supervision

• Reputation• Quality• Human rights• Compliance and ethical business practices• Local employment and businesses• Climate change

• Outotec is indirectly linked to the impacts


Sustainability Agenda 2020Our Sustainability Agenda is built on the five most material topics to our stakeholders and Outotec’s business. We measure our performance with regard to 2020 targets set for each topic. We have defined our most significant impacts with regard to the UN Sustainable Development Goals (SDGs) integrated into our agenda.

Our Sustainability Agenda and goals for 2020 are unchanged, with the timeframe aligned with Outotec’s strategy 2020. Five of the nine most material topics remain as the building blocks of our Sustainability Agenda: safety, our offering, business practices, supply chain, and our people. Our annual targets for the most material topics are linked to our 2020 goals. We continue to integrate the most rele-vant SDGs into our Sustainability Agenda and our annual targets, based on an internal eval-uation and approved by the Executive Board.

We have analyzed Outotec’s impacts on SDGs in an internal workshop, with eleven SDGs identified as most relevant overall, and two SDGs where we have indirect impact. Our commitment and impact analysis of the SDGs was approved by the Executive Board.

DEVELOPMENT WORK DRIVEN BY 2020 GOALSSafety is the most material topic in our ma-teriality analysis. Zero accidents was set as the ultimate high-level target for our develop-ment work, though this very ambitious target

is seldom achieved by any company. Outotec’s management believes that this level of com-mitment to a safe working environment is a necessity in the challenging project circum-stances in which our employees, customers and suppliers work.

Our technologies and R&D have a cen-tral role in our operations, since they repre-sent the key means of improving the resource efficiency of our customers’ operations. For this reason, developing sustainable offering for our customers is also at the core of our sustainability work. Our second long-term goal relates to providing customers with even more sustainable technologies and services, to help them reduce the pollution and con-tamination of air, water and soil (SDG 3) and their ecological footprint. The baseline year for our long-term technology-related targets is 2012.

In line with the goals set by the UN General Assembly, we upgrade our customer’s opera-tions to make them more sustainable (SDG 9), while also improving energy efficiency (SDG 7). Through our technologies, we support actions to combat climate change every day (SDG 13). We also increase the efficiency of water use by reducing the amounts of fresh water needed in our processes, and by increasingly recycling and safely re-using water, thus decreasing the amounts of wastewater (SDG 6). With our solu-tions for renewable energy, we help to make cities more sustainable by enhancing sustaina-ble urbanization (SDG 11). In addition, we have identified an indirect impact of our partnerships with our customers, suppliers, and other busi-ness partners (SDG 17) towards two SDGs in

connection with our business operations. We cooperate with universities on R&D (SDG 4), and drive technological upgrades and innova-tions that will improve resource efficiency in production (SDG 8).

In the area of responsible business prac-tices, we aim to develop strong common val-ues and a robust Code of Conduct, as well as a solid governance structure. An integral part of this goal is to ensure that our Code of Conduct is also implemented in accord-ance with our values. We have zero tolerance for corruption. We continuously train our own employees on anti-corruption topics and re-quire compliance from our business partners (SDG 16). Outotec implements non-discrimi-natory company policies and practices globally (SDG 10).

Because the majority of Outotec’s manu-facturing is outsourced, sustainability along our supply chain is highly important to us. In 2016, having reached the long-term goal for our supply chain, we defined a new long-term goal for our supply chain on supply chain development and auditing. By requir-ing sustainable practices along our supply chain, we also promote the wider adoption of sustainable management practices, thus enabling our clients to use natural resources efficiently (SDG 12).

Outotec’s business is dependent on our people. We want to make Outotec the most desirable place to work in our industry, and to keep great talent with us. As an enabling and engaging culture is a key differentiating factor for Outotec, we aim to achieve 10% improve-ment in the employee engagement index by

2020 in our employee survey. This target was approved by the Board of Directors in 2017.

With equal opportunities as one of our material topics, we aim to increase women’s opportunities for leadership to promote gen-der equality (SDG 5).

LONG-TERM FINANCIAL TARGETSIn addition to our Sustainability Agenda, Outotec aims to achieve continuous profitable growth. Outotec’s Board of Directors set the following long-term financial targets for the company in September 2017:

• Sales growth faster than the market• Annual average service sales growth

over 10%• Profitability (adjusted EBIT) 10%

of sales by 2020 • Gearing at maximum 50%

OUR AGENDA


TARGETS FOR 2020 RELATED SDG

OUR AGENDA

SAFETY: Zero accidents

SUSTAINABLE OFFERING: Share of Environmental Goods and Services in order intake

permanently over 90%

Customers generate 20% less CO2 when using Outotec’s metals-related technologies compared to annual baselines

50% reduction in fresh water intake per tonne of ore in non-ferrous metal concentrators compared to 2012

Double the energy produced through our waste-to-energy solutions compared to 2013

RESPONSIBLE BUSINESS PRACTICES: Strong common values and Code of Conduct; solid governance

structure SUSTAINABLE SUPPLY CHAIN: 100% of our key suppliers audited regularly with supplier

development actions drawn up according to audit findings DEVELOPMENT OF OUR PEOPLE: Employee engagement index 70% in the employee survey

FINANCIAL PERFORMANCE: Continuous profitable growth


Annual targets Our annual sustainability targets are aligned with our material topics, and defined to support our Sustainability Agenda 2020. We have also integrated the UN Sustainable Development Goals into our annual targets.

Target for 2017 Performance in 2017 Target for 2018

GRI indicator & relevant SDG

1. Safety

• New lost-time incident management system implemented globally in major locations.

• Reviewed and simplified harmonized product compliance management procedures in use globally.

Harmonized principles for global incident management defined; system specification done. Implementation pending for 2018.

Simplified and harmonized procedures are released and implementation for part of Outotec functions has been completed. The remaining will be completed during 2018.

• 5% reduction in lost time injury rate (LTIR) GRI 403-2GRI 416-1

2. Sustainable offering

• Environmental goods and services (EGS) to account for over 90% of order intake.

• 20% reduction in CO2 emissions to be achieved through the use of Outotec’s metals-related technologies, compared to industry averages.

• The piloting of the water treatment solution to be completed and our offering expanded to encompass the entire water management of a mine site. The safety benefits of our dry stacking alternative to be emphasized.

• Reductions in the use of fossil fuels by Outotec’s renewable energy solutions amounting to 12 MWe and/or by steam boilers amounting to 60 MWth.

EGS accounted for 88% of order intake.

22% reduction in CO2 emissions achieved through the use of Outotec’s metals-related technologies.

Several laboratory scale pilots and four piloting tests were carried out for customers and the offering has been expanded. Safety benefits were emphasized.

Plants ordered in 2015 were under design and construction in 2017, but not yet in operation.

• EGS to account for over 90% of order intake.

• 20% reduction in CO2 emissions to be achieved through the use of Outotec’s metals-related technologies, compared to industry averages.

• Successful commercialization of new water treatment solutions and receiving at least two new orders based on this technology.

• Waste-to-energy plants delivered by Outotec reduce the use of fossil fuels to exceed our annual targets from two previous years combined

OWN

3. Responsible business practices

• Working conditions to be assessed at Outotec’s main manufacturing and service sites.

• Code of Conduct training for blue-collar employees.

Working conditions self-assessment was carried out at our main manufacturing and service sites.

38% of blue-collar employees attended Code of Conduct training.

• Global working conditions guidelines concerning blue-collar employees to be created and implemented.

• 80% of Outotec’s employees trained on Code of Conduct

GRI 205-2

OUR AGENDA

Partly achieved AchievedNot achieved


Target for 2017 Performance in 2017 Target for 2018

GRI indicator & relevant SDG

4. Sustainable supply chain

• Audits to be run globally to cover 10% of key suppliers where a purchase order has been placed recently, for product quality, with supplier development actions planned (or implemented) according to the audit findings.

• All key suppliers not certified under ISO 14000 and/or ISO 18000 to be audited on health, safety, environmental and social aspects.

21% of key suppliers, where a purchase order has been placed recently, audited for product quality, with supplier development actions planned (or implemented) according to the audit findings.

All key suppliers not certified under ISO 14000 and/ or ISO 18000 were audited on health, safety, environmental and social aspects.

• Auditing 25% of key suppliers globally. GRI 204-1GRI 414-1

5. Development of our people

• Index improvements of 6% in employee engagement compared to Pulse survey results from 2016.

• Index improvement of 4% in performance enablement, compared to Pulse survey results from 2016.

Employee engagement improved by 18%-points.

Performance enablement criteria changed and the results are not comparable to 2016 results.

• Index improvements of 4 %-points in employee engagement compared to employee survey results in 2017.

OWN

6. Equal opportunities and diversity

• 2% increase in the number of female leaders in senior leadership positions compared to 2016.

The number of female leaders in senior leadership position did not increase.

• 2% increase in the number of female leaders in senior leadership positions compared to 2016.

GRI 405-1

7. Community involvement

• One new community project started. New Sustainability Master Class launched with University of Helsinki

• No target for 2018. GRI 413-1

8. Stakeholder dialogue

• Continue with existing feedback surveys to measure our performance per customer relationship, and initiate a new transactional feedback survey for field service.

Customer feedback surveys were successfully continued and established as a continuous process.

• No target for 2018. GRI 102-43GRI 102-44

9. Minimize our own environmental impact

• ISO 50001 energy management systems, including energy saving concepts, to be implemented in all locations in Finland.

• A new harmonized quarterly global energy consumption reporting concept to be created and implemented.

• Maintain the same lower level of CO2 emissions from flights per EUR 1 million sales as recorded in 2016.

ISO 50001 was certified in all locations in Finland.

A new energy consumption reporting tool was implemented in 2017 and is currently in use covering Outotec locations globally.

The emissions from flights per EUR 1 million sales remained at the same level as recorded in 2016.

• Maintain the same lower level of CO2 emissions from flights per EUR 1 million sales as recorded in 2016.

GRI 302-4 GRI 305-5


Digitalization keeps advancing, faster in some industries and with more caution in others. The primary drivers for adopting digital technology and solutions tend to be economic ones, mainly to do with increasing productivity through process efficiency. However, digitalization is also a major contributor to sustainability.Perhaps the most important corporate re-sponsibility impact digitalization has in the mining and metallurgical industry has to do with work safety. There is still a large amount of manual labor involved in ore pro-cessing, and some tasks can be hazardous. Working in close proximity to molten metal has its risks. Digital systems and smart sen-sors can render, for example, manual sam-pling unnecessary.

”Our customers’ strategic targets often include keeping accident rates at the lowest possible level. Removing people from danger-ous places is one way of avoiding accidents. Computers can do the measuring and moni-toring, and the human element comes in when it is time to draw conclusions from the data provided by machines,” says Jari Moilanen, Outotec’s Automation Director.

LEARNING BY SIMULATIONAnother way to increase work safety and avoid accidents is simulation training. The oper-ators can safely practice and learn their job in a virtual environment where the simulator generates the response to the operator’s ac-tions, instead of the live process.

“Virtual training is well suited for practic-

Refining data for sustainabilitying scenarios that happen rarely in real life. For instance, exceptional situations in which the process is disrupted can pose unforeseen risks, for which simulated training scenari-os can help prepare. A stable process that is under the operator’s control is naturally less risky,” Kari Saloheimo, Director, Digitalization says.

The virtual world is also applied to the op-timization of plant operations. A virtual plant that simulates the operations of an actual plant can be used to detect problems or mal-functions as well as to increase productivity and availability, reduce energy consumption and ensure product quality.

MACHINES WORK WHERE PEOPLE CAN’TWell-being at work is not only about safety. Day-to-day working conditions have a major impact as well. The location of a mine is de-termined by the location of the deposit. This is not always an optimal environment for peo-ple. One new mine and concentration plant for which Outotec supplies equipment and sys-tems is located at an altitude of more than 4 kilometers, in a place that is very difficult to reach.

“People who are not accustomed to such heights cannot work there for long periods of time, and it is the customer’s wish that the mine and its concentration plant are operat-ed with minimum personnel. This means we need to strongly support the operation from a less hostile and more accessible work envi-ronment. A host of digital solutions are need-ed to track what the measuring equipment on the mountain show and to simulate scenarios for both running the process and managing equipment maintenance,” says Jari Moilanen.

Expert and advisory systems also play a part in well-being at work, which depends on more than just the physical environment. Having facts and knowledge-based advice to support decision-making reduces the psy-chological load of process control personnel. Well-applied digitalization can also help the working community to promote a culture of sharing and cooperation.

EFFICIENCY GOES UP, EMISSIONS GO DOWNImproving efficiency is, of course, on every-one’s agenda. Better resource efficiency means – in Outotec’s world – more metal from the same amount of ore, using the same amount of energy, water and chemi-cals. Consequently, a smaller amount of val-uable metal ends up in the tailings area or slag pile. So, resource efficiency is good for business, but it’s also good for the environ-ment.

“When humans drive processes, they tend to be more cautious than machines. Digital technology allows plants to operate closer to their optimal parameters, which minimizes the use of energy and chemicals per production ton. This translates to re-duced emissions,” says Jari Moilanen. “The sustainability of mining operations is cur-rently a hot topic, especially in China, where the government gives significant financial support to so-called ‘Green mines’ that are able to improve their material, energy and water efficiency.”

The efficiency of maintenance oper-ations can also be improved with digital technology. Instead of replacing parts and components according to calendar-based,

Digitalization gives new meaning to

human factor

pre-determined schedules, equipment can monitor their wear and tear to determine when they need to be replaced. Comparing the condition of the part to historical data gives an indication of its remaining lifetime. This means that maintenance intervals can be extended and breakdowns still avoided. And if a machine can indicate that trouble is on the way, the necessary maintenance per-sonnel can be alerted and parts delivered before the situation is critical.

DIGITALIZATION GIVES A COMPETITIVE EDGEOne of the key goals in Outotec’s strategy is to grow its service business. This is yet an-other opportunity to put digital technology to good use.

“Digitalization enables us to engage in constant dialogue with our customers. It al-lows us to apply the expertise of the entire company by giving our maintenance person-nel easy access to digital data. It speeds up our ability to deliver spare parts. All in all, digitalization gives us a considerable compet-itive edge compared to smaller, local service companies,” Olli Nastamo, Senior Vice Presi-dent, Operational Excellence says.

OUR AGENDA


WHAT ABOUT THE JOBS?Digitalization often evokes a concern about disappearing jobs. When machines replace us, what is left for us to do? According to Olli Nastamo, there is no need to worry.

”It is Outotec’s view, as well as that of leading consultancies in the industry, that work will change but not disappear. People will be needed also in the future, but their tasks will involve fewer hazards and less re-petitive, manual work. The changing roles call for new skills, and this is something the min-ing industry has now realized. The industry cooperates with educational institutes and re-search facilities as well as with mining com-panies’ stakeholders to find ways to update the know-how of workers,” Olli Nastamo says.

Outotec also participates in a mining in-dustry cluster to tackle this issue. The com-pany is currently determining the best ways it can contribute – for instance by offering its digital solutions or its own networks for edu-cational and research use.

In the end, the best way to safeguard jobs is to ensure the continuity of the business. Competitiveness in today’s world requires that the benefits and opportunities offered by dig-italization are seized. Sustainable operations are increasingly required by governments and investors. By operating profitably, com-petitively and sustainably, Outotec can contin-ue to employ personnel, pay taxes and there-by contribute to society.

Stakeholder dialogue was identified as one of the nine most material topics in our materiality analysis. We aim to enhance transparency by maintaining continuous dialogue with our key stakeholders. Outotec defined its key stakeholders in con-nection with the materiality analysis review conducted in 2014. Approximately 120 Outotec leaders shared their views on the relevant top-ics and stakeholders, and the results were ver-ified by Outotec’s Sustainability Advisory Coun-cil. The material topics and stakeholders are reviewed at approximately 2-3 years intervals by the Corporate Responsibility function and the Sustainability Working Group.

The Executive Board reviews the effective-ness of our stakeholder engagement and gives briefings to the Board of Directors. In addition, Chief Compliance Officer reports the issues raised through grievance mechanisms to the Board of Directors. (GRI 103-3)

We have defined the following groups as our key stakeholders (GRI 102-40):

• Customers• Employees• The academic community• Investors and financiers• Suppliers• NGOs and media

We also consider our planet and future generations as stakeholders when evaluating whether Outotec’s offering and operations are future-proof.

In 2017, a Global Procedure for stake-holder engagement was launched as part

Engaging with stakeholders

of Outotec’s globally harmonized Quali-ty, Environment, Health and Safety Manage-ment System. (GRI 102-42). In a review of key stakeholders conducted during 2016 by the Sustainability Working Group and the QEHS team, the academic community was added as a key stakeholder group due to frequent busi-ness-related engagement. The Sustainability Working Group has not identified any stake-holder groups that Outotec would not engage with.

To measure our success in engaging with stakeholders we have set targets related to customer surveys, employee engagement and local community engagement initiatives.

Outotec’s Sustainability Advisory Coun-cil, established at the end of 2014 to advise the company regarding sustainability trends, strategies and reporting, has given input on how our stakeholders view the economic, so-cial and environmental impacts of our deci-sions. The six Council members represent-ed customers, investors, suppliers, NGOs and academia. In 2017, we decided to continue our stakeholder dialogue through our regu-lar engagement tools and methods, and the Sustainability Advisory Council ceased to con-vene; see page 24 for more details on our en-gagement tools.

We have asked our employees for feed-back about the report, future themes and top-ics of interest in sustainability communica-tions, using our internal social media. We have also discussed our sustainability reporting with some investors and sustainability focused portfolio managers and received feedback from them. Other forms of stakeholder engagement were not undertaken specifically as part of the report preparation process. (GRI 102-43)

To collect open feedback from our stake-holders we have published a form on our website [www.outotec.com/contacts/ contact-information/feedback/] through which feedback can be submitted anony-mously. Through this public feedback chan-nel there were no concerns raised in 2017.

LISTENING TO CUSTOMERSCustomer satisfaction is high on our agenda. We build up our understanding of our custom-ers’ needs and challenges by systematically collecting feedback. We have also invested in internal feedback channels and feedback management to improve our products, servic-es and operations.

The key parameters used by Outotec to measure global customer satisfaction are our Net Promoter Score and Customer Satis-faction ratings. We started our global survey program in 2015, and in 2017 we integrated our feedback surveys to our CRM to enable managing the feedback with other custom-er activities. The key drivers behind customer recommendation and overall satisfaction have not significantly changed from 2016, the main drivers being technologies, product quali-ty and Outotec expertise while improvement areas are found within response and delivery times. Our focus on service development is something our customers clearly appreciate.

In our feedback survey, we request cus-tomers to comment on the most important factors behind the scores they give. This focus on open comments helps us to tune in to cus-tomers’ true feelings and hear their voices. These comments form the basis for actions designed to achieve improvements from in-dividual accounts to the global level. We are

OUR AGENDA


analyzing the comments for improvements, and have started several development initia-tives based on the analyses. In 2017, we col-lected more than 3,000 customer comments to analyze for actions, and our ambition is to continue to expand the sample going forward.

Outotec is continuously cooperating with its customers, especially in technology and process development. In joint R&D or delivery projects, both Outotec and its customers are able to improve their competences and re-quirements, e.g. to increasing resource effi-ciency or digital competences (remote access, process control & optimization).

One such project in 2017 was Critical Ele-ments pilot case in the Pori Research Center, where piloting demonstrated that the con-version of Critical Elements’ spodumene re-sources into lithium carbonate battery quality using the thermal leaching process was easily achievable. Read more at. www.cecorp.ca/en/critical-elements-suc-cessfully-completes-pilot-plant-work-lithi-um-carbonate-conversion/

ENGAGING WITH EMPLOYEESThe new strategy “This is Outotec 2020” was launched in September and presented first in townhall meetings to all employees. In addition to the main events organized and broadcasted in the headquarters, the main lo-cations organized their own events. Further-more, the most prominent strategic themes were discussed in events organized in all lo-cations where trained colleagues and top management facilitated the discussion. The feedback from employees was positive.

The bi-annual employee engagement sur-vey was conducted in November 2017. 82% of the employees gave their feedback in the sur-vey. After many challenging years in employee relations, the survey marked an upward curve

in the engagement index, which improved 18 %-points.

We continued to hold the CEO’s quarterly internal briefings. Employees may ask ques-tions during these briefings, and they can also watch a video recording afterwards. To sup-port the strategy cascade, we introduced a new monthly strategy chat concept, a live vid-eo broadcast with selected top management representatives. Audience has possibility to ask questions and comment the strategic themes in these facilitated discussions.

Our global intranet serves as a platform for day-to-day information sharing. To com-plement this platform, our Outotec News Channel for video communications and the new Office365 collaboration tools play ever increasing role in internal collaboration. The new internal social media tool Yammer was quickly adopted for discussion and dia-logue. By the end of 2017, over 3,800 employ-ees were sharing their opinions in Yammer, in over 470 discussion groups which demon-strates that the new tool was quickly and widely adopted.

Two Outotec Round Table events were held during 2017, bringing together some 20 personnel representatives and top manage-ment. The topics discussed included our new strategy, rewarding (performance develop-ment dialogue and compensation policy), travel safety, GDPR and data privacy issues as well as employee engagement survey results.

Employees as ownersMany Outotec employees are also sharehold-ers through the employee share savings plan, which was launched in 2013. The Plan rewards employees for their long-term commitment to the company. Approximately 20% of employees participated in this program in 2017.

1,223 employees who participated in the

Plan in 2014, and kept their shares until May 2017, received free shares. Outotec offered beneficiaries one free share (gross, with cash payments for taxes deducted) for each two shares bought with the 2014 savings.

Enhancing feedback cultureA new portal for internal feedback collect-ing was launched in late 2016 and deployed in 2017 to enable internal feedback to be sub-mitted and processed smoothly. Feedback can range from improvement requests and ideas from business and application to facili-ties, well-being and products, and to report-ed non-conformities related to quality in pro-ject and service delivery. The deployment was done in stages and it included also training sessions for the different parts of the organ-ization. In 2017, total of 244 feedback entries were received through the portal. Nearly half of the entries were related to quality of prod-uct and service deliveries. The portal will be further developed as a part of the continuous improvement process.

REGULAR DIALOGUE WITH INVESTORS Outotec’s approach to investor relations and communicating with the financial markets is based on Finnish law, EU directives, and our own policies on corporate governance and disclosure, as well as stock exchange rules and regulations.

At the end of 2017, Outotec had 25,478 (29,686) shareholders. Shares held in 11 nominee registers accounted for 35% of all Outotec shares, while private Finnish inves-tors held 14%. Fourteen sell-side analysts and one credit analyst conducted research focusing on Outotec.

The annual Capital Markets Day event was held on September 21 at Outotec House in Espoo, Finland.

In addition to our quarterly investor brief-ings and annual financial statement briefings, the CEO’s mid-quarter Q&A sessions contin-ued to be an important channel for maintain-ing dialogue. These audio casts aim to fur-ther clarify information that has already been made public. In addition, we met frequently investors and analysts in one-on-one discus-sions, at industry seminars and road shows.

In order to serve the capital market ef-ficiently, to ensure equal access to compa-ny-related information, and to comply with disclosure requirements, all our audio casts are recorded and available for on-demand viewing at www.outotec.com/company/inves-tors/reports-and-presentations/. In 2017, we also started streaming our quarterly investor briefings live in Facebook.

COMMUNITY INVOLVEMENTCommunity involvement is one of the materi-al topics at Outotec. As a buyer of goods and services, Outotec generates employment and contributes to socio-economic development in local communities. Our cooperation with uni-versities and subcontracting R&D work pack-ages generate local jobs and enhance skills and knowledge development.

Our reporting on community involvement covers the cooperation with the academ-ic community, voluntary work of our employ-ees, as well as local initiatives of our largest manufacturing units, R&D centers and project sites (GRI 103-1). The key impacts of com-munity involvement are related to wealth, so-cial acceptance of the company’s operations, Outotec’s reputation as well as supporting science, research and education.

Our target for 2017 was to start one new community project. This was achieved through our involvement in the Sustainability Master Class program at the University of

OUR AGENDA

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Helsinki in Finland as described below.

Cooperation with the academic community Partnerships and networks with universities and research institutions are an important part of Outotec’s everyday business. In 2017, Outotec cooperated with more than 30 univer-sities and research institutions worldwide.

In Finland, Outotec’s closest research partners in 2017 were Aalto University, VTT Technical Research Centre of Finland Ltd, Lappeenranta University of Technology, Uni-versity of Oulu, the Geological Survey of Fin-land and the University of Helsinki. In Ger-many, where Outotec also has an in-house research center, we have had good collabo-ration with technical universities in Aachen, Erlangen, Darmstadt, Karlsruhe, Hamburg and Freiberg. The scope of these partner-ships varies, but they are primarily related to process technology, resource efficiency, digitalization and IoT development, circular economy, hybrid materials and water issues.

Outotec is a core partner in the European Institute of Innovation and Technology’s (EIT) Raw materials Knowledge and Innovation Community. This platform aims to make raw materials into a major strength for Europe by boosting competitiveness and the attractive-ness of the raw materials sector. Outotec par-ticipates in nearly 20 related projects, aiming to create new business by upscaling technol-ogies, while also generating new educational programs and strengthening Europe’s infra-structural network. The volume of these pro-jects in total is ca. one million euros yearly.

Also, Outotec participates in further EU Horizon 2020 projects in the fields of Indus-trial Leadership, Societal Challenges and Ex-cellent Science. We have 9 Horizon projects ongoing, with an overall volume of nearly two

million euros yearly. These projects are car-ried out together with industrial actors and academic partners. This allows us to develop our technologies in close interaction with our customers, thus achieving a greater impact on real environmental problems.

Besides project-related research co-operation, Outotec has permanent type of partnerships with many universities or other educational institutes. These partnerships involve contributing to educational steer-ing committees, guest lecturing, software licensing, hosting student groups, and col-laborating on Bachelor’s, Master’s and PhD theses.

Outotec also participates in the technical secretariat of the EU’s Operational Environ-mental Footprint Sectoral Rules (OEFSR), pi-loting for copper.

Outotec had the Presidency of the Europe-an Sustainable Phosphorus Platform (ESPP) in 2017. Read more about our representation in industry associations and commitment to external initiatives on www.outotec.com/ sustainability.

One example of educational cooperation in 2017 is the Sustainability Master Class, which was jointly run by the University of Helsinki and Outotec to fuel innovation by activating an interdisciplinary group of 45 young research-ers and professionals. In the four-month pro-gram the participants were divided into six groups which focused on the real business challenges set by Outotec. The co-creation work was mentored by business and technol-ogy experts. In the final pitch in April the first prize went to MineLoop, an online tool for re-al-time continuous communication between the mining companies and local communities. The application enables effective stakehold-

er dialogue and data collection of both “hard data” from environmental measurements and “soft data” i.e. feedback, questions and con-cerns from the locals. The application period for the next Master Class was open in Novem-ber and the program continues in 2018.

Outotec has also established sustainability prize to encourage university students to apply their ideas to create practical innovations. In Central South University in China Outotec has awarded the ten best projects promoting sus-tainable design since 2013. In 2016 a decision was made to continue this cooperation biannu-ally for at least four more years.

Working with NGOs and local communities Outotec aims to support local projects that benefit communities where our major cus-tomers operate. These community projects are based on local needs, and defined through dialogue with local communities. We strive to realize community projects in collabora-tion with our customers, using joint financing. We also aim to integrate voluntary work into community projects – both during and outside working hours. All community projects must bring measurable benefits to the local com-munity (GRI 103-2).

Outotec has continued to support the Bal-tic Sea Action Group’s initiatives for the re-habilitation of the Baltic Sea, and additionally sponsored the Millennium Technology Prize. We also see the Sustainability Awards we give to students in South Africa, China and Aus-tralia as a means of engaging with local com-munities.

Charitable financial donations were frozen for 2017, after Outotec’s Board of Directors proposed to the Annual General Meeting of shareholders in April that there would be no budget for such donations for 2017.

RELATED POLICIES:• Global Procedure for

Stakeholder Engagement• HR policies• Disclosure Policy• Social media guidelines• Donation Policy• Code of Conduct• Supplier Policy

OUR AGENDA

In 2017, 24% of our operations ran small local community engagement programs (GRI 413-1) mostly based on voluntary work. Such activities had to be reduced due to the weak financial performance of the company. Outotec did not make any social or environ-mental impact assessments in 2017.

Engaging with the mediaWe interact with media representatives both locally and globally to publicize our sustaina-bility work. Our CEO’s quarterly briefings pro-vide basic information about Outotec’s per-formance. We also organize interviews where journalists can discuss our goals, new prod-ucts and newsworthy events with our man-agement representatives. We publish case stories on our website for the media, and aim to organize press trips to Outotec’s R&D centers or reference plants at customers’ sites, in order to show concrete examples of our work to journalists.

Our experts additionally meet trade press representatives at exhibitions and conferences, and share the latest product news with them.

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Expectations Our engagement tools

CUSTOMERS

• Creating value for customers

• Sustainable and safe products and services

• Social license to operate

• Regular meetings held as part of Outotec’s Account Management, Sell and Deliver processes

• Customer satisfaction surveys

• Joint R&D projects

• Training, user meetings, workshops

• Seminars, conferences, trade shows

EMPLOYEES

• Safe working environment

• Company values and a culture that enables professional development

• Long-term economic perspective


• Fair and competitive compensation

• Proper communication and feedback channels

• Regular briefings and info sessions

• Global intranet, collaboration tools and social media

• Performance development dialogues

• Outotec Round Table

• Employee surveys

• Compliance helpline and feedback channels

• Young Professionals network

SUPPLIERS

• Fair treatment

• Long-term partnership

• Economic sustainability

• Contacts through Outotec’s Deliver process

• Supplier Policy

• Code of Conduct

• Supplier assessments and audits

• Joint continuous improvement of processes

• Outotec Supplier Days

ACADEMIC COMMUNITY

• Relevant technological and scientific challenges for research

• Feedback and encouragement from industry

• Operational data

• Partnerships

• Joint programs

• Seminars, lectures, visits

• Thesis opportunities for students

• Internships

• Networking

Expectations Our engagement tools

INVESTORS AND FINANCIERS

• Return on investment

• Long-term economic perspective


• Quarterly briefings

• CEO’s mid-quarter Q&A sessions

• Capital Markets Day

• Roadshows, one-on-one meetings, industry seminars

• Annual General Meeting

• Excursions to Outotec sites

• Annual surveys

NGOS AND LOCAL COMMUNITIES

• Transparency and proactivity

• Engagement and local presence

• Social responsibility and respect

• Joint soci

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